Corporate Bankruptcies Soar Amid Economic Downturn

Driven by a sour economy and skittish consumers, U.S. business bankruptcies saw their sharpest quarterly rise in two years, jumping 17 percent in the second quarter of 2008, according to an analysis by McClatchy.

Commercial filings for the first half of 2008 are up 45 percent from last year, as the national climate for commerce continues to deteriorate amid rising energy and food costs, mounting job losses, tighter credit and a reticence among consumers to part with discretionary income.

From April through June, 15,471 U.S. businesses called it quits, according to data from Automated Access to Court Electronic Records, an Oklahoma City bankruptcy management and data company.

Read the whole story here.

Comments

[Harrier]

I know Bush Jr and Sr stopped funding the unemployment report that collected data showing how many companies were reporting laying off 500 people or more during a year. I live in California. Right now it looks like there is no light at the end of the tunnel. Virtually all its manufacturing has left the state, gas prices are the highest in the country and we are seeing a lot decided if they should fill up their tanks with gas and go to work or keep their utilities on. It is weird because the governor is catering to lobbyiest that are trying to take more and more taxpayer monies. I guess it's easier to increase profits by getting their income streams made law than working for it as this country was intended

[darthdarcy]

Corporate Bankruptcies are a great way for these corporations to renege on their Pension and Medical coverage responsibilities...

The thing is corporations can still declare convenient bankruptcies but the middle and working class being crushed even due to catastrophic illness cannot...!

[loki]

Yes, but corporate bankruptcies usually mean they stay right were they are, and just dont have to pay back their debt. Unlike private bankruptcies, thanks to the Bushco and Banks credit reform bill that doesnt allow a way out for people without millions or billions in the bank. If your rich, you can get a clean slate and keep everything you have. If your poor, you lose it all, and you have to pay, your children will pay, and your grandchildren will pay. The law allows this for the middle class and the poor even if they dont have a job anymore or poor health prevents them from returning to work. But not if you owe millions of dollars and have run your failing corporation into the ground. You not only get a clean slate, you get a couple million dollar bonus each year! Who says there are not 2 Americas?

[DofG]

There is an axiom in music performance that says: "When your're lost, find One!" This holds true in everything of Man! But the collective ego will not allow us to give notice to this "profound simplicity". So let us continue to argue relativistic positions about who's right, and who's wrong ad infinitum, while we ride the current of a vortex that leads to ruin!
Corporate bankruptcies? Let them fail, and let them fall! Sometimes one has to lose everything, and fall down to their knees, before one can see the truth of a thing!

[letsgetsmart]

I wonder if the msm called the situation in the 30's a sour economy with skittish consumers? We are heading there again and for the same reasons. Will Wall Street burst again? Who will be the ones that pick up all of the cheap assets because they have cash?I thought we had put laws and regulations in place to prevent this from happening again. The statistics in this story tell me that the msm is once again keeping the public in the blind and do not deserve to be using our airways. There are going to be a lot of really angry people over this. I wonder where this will go.

[Tom95134]

If there are no customers then I don't care how much the Clown Prince in the White House says that the economy is doing okay. The bottom line is, No Customers = No sales = Bankruptcies. Small businesses cannot survive without a vigerous middle class. Something that the Bush Bunch doesn't understand and never will understand because they have never had to work for a living.

These number simply reflect what the middle class have been feeling within a year of Bush taking office. Giving tax cuts to the rich is like giving water to a horse and hoping that enough passes through to keep the worms happy.

[darthdarcy]

All we had to do to avoid all this was Peg the Sub Primes at 3% above the Fed Rate or even Prime rate not to go below 6.25-6.5% and forgive all penalties to date over 1/2 of which are illegal anyway as reported...

Then the Banks and Lenders would not have lost any money and the vast majority of these people could have remained in their homes...

And not one penny of Tax Payers Money would have been involved or spent to bail out either the Lenders or the Borrowers..

It was a simple as that..!

[joebhed]

Actually, as far as these states go, their geographic location and size are not as significant as their corporate, banking and insurance laws.

Certainly Montana, Delaware and a couple of others were designed to be havens for a number of truly questionable practices in these areas.

And these re-insurance entities, credit writers etc. are small firms writing questionable policies that required state legislation to enable when nobody was looking.

The bigger story in corporate bankruptcies is yet to come related to the commercial lending portfolios that also got overblown in the credit bubble.

We will see the Alt-A bubble bursting onto the slowdown in the sub-prime crash, and that will either be closely followed by or joined in tandem with commercial lending contraction.

It's too bad we have to live in the only country in the world where when you lose your job because of the immense stupidness of the private banking system, you also lose your health-care benefits. This will however provide a well-paid college education for the kids of the bankruptcy lawyers, paid for by American workers headed for the poverty rolls.

If it weren't for those anti-capitalist idiots who did away with debtor-prisons, we could be seeing an emerging industry that would dovetail nicely with all those ordinary prisons full of drug users and thieves.

Monetary Transformation Now

[rollingdivision]

Bankruptcies or business failures are good for the economy. Businesses which don't please their customers should fail.

[HamletsMill]

I guess Bear Sterns is an example, right? Privatize profits, socialize risk. Yeah. That's the ticket.

[ErnestineBass]

Poor, poor RalphingDerision still believes in the Horation Alger myth. LOL

[ErnestineBass]

Oops...Horatio

[RTIII]

Not pleasing your customers is not the only reason businesses fail - not by a long shot.

Business failures are seldom good for the economy. We prefer a climate in which a business lost is net neutral on the economy and upon employee outlook. However, in already down environments, a business loss can have devastating effects.

Also, businesses can "fail" even when they did everything right and were making a profitable product that customers love. Sometimes its because of manipulations by the largest players who unfairly manipulate the business environment in various ways. Sometimes there are shill investors who decide to pull out of a profitable situation because of a loyalty to another business interest or because they put themselves in that position specifically to screw up someones chances of being a competitor to some other interest. Sometimes there are bribes paid to officials and other manipulation of what you might call the legal / regulatory environment.

...There are a LOT of reasons businesses fail, and many of them are not due to the "survival of the fittest" in the sense we think is healthy but more because of the fact that business is a type of warfare and "all's fair in love and war."

You ought develop a more sophisticated view than the one espoused in your two sentences.
.

[ImmanuelGoldstein]

This isn't about pleasing customer. PEOPLE DON'T HAVE ANY FREEKING MONEY TO SPEND! Can't you get this obvious fact through your empty skull.?

[ImmanuelGoldstein]

Altogether now.....

"REPUBLICANS ARE GOOD FOR BUSINESS"!

[MajorKong]

Yeah, if you're a bankruptcy attorney.....

[MetalCanuck]

Well this is the Central banking fiat money scam. Its collapsing and people are trying to blame the people who are trying to save themselves from the crash.

[joebhed]

Do I read you right that the source of the problem is the lack of a metal-based currency here?

Cause, if so, please explain.

Thanks.

[swift goat pet for truth]

And on Monday, Rush or Hannity will tell you why this is a GOOD thing!

[AliHajiSheik]

Anything that happens in the Greatest, Best Country God Has Given Man on the Face of the Earth is a good thing.

[swift goat pet for truth]

What does Norway have to do with this?

[rollingdivision]

No need to wait, business failures are good for the economy.

[RTIII]

Not often they aren't.
.

[swift goat pet for truth]

Because they socialize costs, yet privatize profits.